Owning a car is highly desired by most and one of the first life goals an individual seeks to achieve once they start earning money. As someone said, “Success is hard, but maintaining it is harder,” and the same goes for your assets like cars. Therefore, it is important to have the shield of auto insurance in times of need. Having a good car insurance policy is essential to reaping the benefits when needed, and renewing it correctly is as essential as buying it.
Here are some things to consider before renewing your auto insurance policy.
1. Untimely policy renewal
Timely policy renewals are very important to take full advantage of the plan/policy. Just like with Netflix or Amazon, when you fail to renew, it shows an upgrade subscription sign; likewise it is with car insurance. Lapse insurance exposes you to traffic penalties, fines and loss on accrued benefits.
2. Renewal without consideration of options
Buying auto insurance is important, but buying it after considering the best options available is just as important. Even if a hasty decision was made when buying a policy, it can be rectified when renewing. Plus, knowing all the options gives you the chance to get good car insurance with a low premium and the best features.
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3. Not having the right kind of policy
There are mainly two types of policies available for auto insurance – third party policy and comprehensive policy. In case of poor assessment of his need before taking out car insurance, one can choose a policy that turns out to be insufficient. It is therefore important to know which features of the policy you want to cover and decide on the insurance policy accordingly.
4. Updating correct information
Updating all your information, such as address, phone number, etc. with the insurance company is also very important when you want to benefit from the features of the policy. It is therefore equally essential to update personal information and ensure that it is correct.
5. Making the Most of the No Claim Bonus
No claim bonus accrues where there has been no claim in the previous year, and this is lumped together as a rebate. This can be availed at the time of policy renewal. It is therefore very important to check the amount of claim-free bonus you are entitled to, and when applied it will reduce your renewal premium.
6. Choose the right IDV
Choosing the right IDV (Insured Declared Value) is equally important at the time of purchase or renewal. Simply put, this is the amount the insurance company is obligated to pay you if the car is lost or damaged. Therefore, a lower IDV leads to a lower premium and vice versa. However, an incorrect assessment can be financially damaging when it is needed.
7. Use voluntary deductibles with care
There is a mandatory amount that you must pay out of pocket before the insurance company will pay any additional amount. One can pay an additional amount as a “voluntary deductible” to reduce the premium. However, if claims are made, the amount must be paid out of pocket. So, it has to be a well-considered decision.
8. Choose the right add-ons
Choosing the right supplementary cover is also essential so that your insurance cover is comprehensive and able to support you when you want it most. Some of the good options are:
- Zero amortization coverage
- No claim bonus coverage
- Roadside assistance coverage
- Passenger cover
Purchasing auto insurance is a big decision that requires careful consideration of the options available and the additional coverages needed. Moreover, renewing it on time while enjoying the eligible benefits is also a process that should be targeted and properly assessed. Good advice sought when in doubt can also prevent making bad decisions.
(By Venkatesh Naidu, CEO, Bajaj Capital Insurance Broking Ltd)